Oil Trades Near Two-Week High as President Obama Wins Election

President Barack Obama’s victory reduces the likelihood that the U.S. will expand oil and gas drilling offshore and on federal land. The president threatened to veto a bill passed by the House of Representatives in July that would have almost doubled the number of oil and gas lease sales through 2015. Photographer: Jonathan Alcorn/Bloomberg

Nov. 7 (Bloomberg) -- Oil traded near the highest level in
two weeks in New York, paring an earlier decline, after U.S.
voters returned Barack Obama as president of the world’s biggest
crude-consuming nation.

Futures were little changed after dropping as much as 1
percent. Oil rallied with gold while the dollar fell after
television network projections showed Obama winning re-election
and Republican challenger Mitt Romney conceded defeat. Investors
speculated the victory increases the chance the U.S. will
continue monetary stimulus that tends to weaken the currency and
boost dollar-denominated commodities.

“The idea in the market that Obama is more in favor of
further monetary intervention than Romney helped lift gold and
oil and weaken the U.S. dollar in response to his election,”
said Jeremy Friesen, a commodity strategist at Societe Generale
SA in Hong Kong.

West Texas Intermediate crude for December delivery was at
$88.72 a barrel in electronic trading on the New York Mercantile
Exchange, up 1 cent, at 3:42 p.m. Singapore time. The contract
earlier dropped as much as 84 cents to $87.87. Prices gained
$3.06 yesterday to $88.71, the highest close since Oct. 22.
Futures have more than doubled since Obama took office in
January 2009 and are down 10 percent this year.

Brent oil for December settlement on the London-based ICE
Futures Europe exchange was up 26 cents at $111.33 a barrel. The
contract climbed 3.1 percent yesterday. The European benchmark
crude was at a premium of $22.63 to New York-traded WTI, from
$22.36 yesterday.

Oil Drilling

The dollar fell 0.4 percent to $1.2863 per euro after
earlier gaining as much as 0.2 percent. Gold advanced 0.6
percent to $1,726.57 an ounce.

Obama’s victory also reduces the likelihood that the U.S.
will expand oil and gas drilling offshore and on federal land.
The president threatened to veto a bill passed by the House of
Representatives in July that would have almost doubled the
number of oil and gas lease sales through 2015. Romney said he
supported increased drilling.

U.S. crude inventories probably rose 2 million barrels to
375 million last week as Hurricane Sandy shut refineries on the
East Coast, according to a Bloomberg News survey before an
Energy Department report today. Gasoline stockpiles fell by 1.5
million barrels while distillate supplies declined 1.25 million,
the median estimate of 11 analysts showed.

“Unless the U.S. economy revives, there’s unlikely to be a
big jump in prices,” said Dharmesh Bhatia, an associate vice
president at Kotak Commodities Services Ltd. in Mumbai.“Demand
needs to go up. Prices may rise to $95 to $96 a barrel during
the U.S. winter season, but will fall back again.”

Gasoline Demand

Gasoline demand slid 2.4 percent last week to an eight-month low as the storm disrupted travel and supplies, according
to data from MasterCard Inc.

Stockpiles of the motor fuel rose 1.38 million barrels to
201 million last week, the American Petroleum Institute said
yesterday. Crude inventories slid 27,000 barrels to 371.7
million, and distillate supplies increased 173,000 barrels to
118.4 million. Crude stockpiles at Cushing, Oklahoma, the
delivery point for the New York contract, fell 430,000 barrels
to about 43 million, according to the industry group.

The Energy Department is scheduled to release its inventory
report at 10:30 a.m. in Washington. The government requires that
reports be filed with the agency for its weekly survey. The API
collects stockpile information on a voluntary basis from
operators of refineries, bulk terminals and pipelines.

Fuel Shipments

Twenty-one petroleum tankers will arrive over the next four
days in New York Harbor as the region grapples with fuel
disruptions following Sandy and a New Jersey refinery said it
would be offline as long as three weeks.

Five of the 21 ships are carrying gasoline, five are
transporting naphtha, four hold crude and three are fuel oil,
Charles Rowe, a spokesman for U.S. Coast Guard in Staten Island,
New York, said in a telephone interview yesterday. Phillips 66
said it plans to resume operations at the Bayway refinery in New
Jersey in two to three weeks after repairing equipment damaged
by Sandy.

The Energy Department yesterday reduced its crude price
projection for 2012 on speculation that global production will
outpace demand during the fourth quarter. WTI will average
$94.51 a barrel this year, down from the October forecast of
$95.55, the department’s Energy Information Administration said
in its monthly Short-Term Energy Outlook.